This is a petition under section 97 of the Companies Ordinance, 1984 (hereinafter called the Ordinance) for confirmation of the reduction of the authorized share capital of the company by 50%.
The authorized capital of the petitioner company is Rs,1,000,000,000 divided into 100,000,000 ordinary shares of Rs,10, which is proposed to be reduced by 50% by special resolution carried out at the meeting of the Board of Directors, (who are the only shareholders of the company) held on 9th June, 1997. The company was incorporated with the object of investing its capital and acquiring units in the process of being privatized but as the privatization process was found to be sluggish during the past 2 years and was likely to be fast wide enough the present level of petitioner capital was found to be inadequate as an investor. In the scheme of reduction it is proposed to reduce the shareholding of the shareholders by 50% who would surrender their shares and in substitution thereafter, new shares would be issued by the company on prorate basis.
3. Petition was advertised in Daily Nawa-i-Waqt, Karachi, and Daily The News, Karachi, for the hearing fixed on 18-9-1997. Publication was also made in the Gazette of Pakistan, dated 3rd September, 1997, but none has appeared to oppose or contest the prayer. A notice was also issued to the Registrar Joint Stock Companies CLA, who initially raised a preliminary objection that share capital could not be reduced in the absence of any Article in Memorandum of Association, but subsequently on being pointed out that Article 48 of Memorandum of Association provided for such situation the objection was dropped.
4. In support of the petition apart from the special resolution passed by the shareholders, copies of Auditor's Report for the year ending 30-6-1996.No Objection Certificates for reduction of share capital from Al-Zamin Leasing Modaraba as well as Pakistan Kuwait Investment Company (Private)
Limited, the Certificate of Incorporation and Certificate of Commencement of Business from the Registrar Joint Stock Companies, Corporate Law Authority have also been appended to the petition besides certified copy of the Memorandum and Articles of Association of the Company. In a case for confirmation of a resolution for reducing share capital the questions for consideration are, should the Court refuse its sanction .to the reduction out of regard to the interests of those members of the public who may be induced to take shares in the company; is the reduction fair and equitable as between different classes of shareholders; whether the reduction is shared by all and is designed to work justly and equitably and whether it does not involve diminution of the liability in respect of any unpaid capital or payment of any shareholder of any paid-up capital and there is, evidence regarding the loss of capital and non-representation of available assets. None of these impediments exists in the case of the petitioner's company. In the facts and circumstances of the case I am convinced that the proposed reduction in the share capital is just, fair and reasonable and not likely to adversely affect the interests of the shareholders who have they resolved to approval of this scheme. Proposal for reduction of share capital is, therefore, confirmed as enunciated by section 97 of the Ordinance.